It’s almost tax season! We all know that when April rolls around each year we need to be prepared to file our taxes. In honor of tax season, the Insurance Canopy Program has put together a list of tax tips for window cleaners, maids, carpet cleaners, and those who are self-employed or own their own cleaning business.
Tip #1: Deduct Expenses
You can deduct the expense of purchasing business insurance, along with other business expenses. In order for a business expense to be deductible, it must be considered both necessary and ordinary. This means that it must be an expense that is considered normal for the industry, and it must offer your business an important (though not necessarily indispensable) benefit. Liability insurance and other business insurance usually fall under these specific categories.
Some other business expenses you may not have considered are the costs of travel and lodging. If you attend a conference in your field and you go to lunch with other window cleaners or business owners to discuss ways to improve your business, this would fall under this category. Any continued education or training in your field for your business would also be covered.
For more information on deducting business expenses visit the IRS website.
Tip #2: Keep Records
According to the IRS, you should typically keep records of all your business transactions for at least the past three years. There are several different software programs that you can use to do this, some as simple as Google Sheets or Microsoft Excel.
Make sure you keep your records updated throughout the year, because you’ll need them when filing your taxes. This is essential in case you are selected for an audit. It will also make your life more simple when it’s time to calculate all of your business expenses. If you don’t keep a record of your business expenses, you won’t be able to mark them down as tax deductible.
Tip #3: Report Cash Income
Be honest and report your cash income–including tips. Federal law requires a person to report cash transactions of more than $10,000 to the IRS. This will protect you and your business in the long run. You’ll need to fill Form 8300 to report any cash transactions more than $10,000. If you need additional information on this step, take a look at this link, which also has a helpful video.
Of course, at Insurance Canopy, we specialize in insurance and not taxes, so if you have questions about this information or need more information about preparing your taxes, consult a tax specialist or attorney. You can also purchase professional tax software, like Intuit ProSeries Tax, and work with an accountant to ensure you have everything in place.
If you would like more information about general and professional liability insurance for carpet cleaners, janitors, house cleaners, or other cleaning professionals, take a look at our website to see what our policies cover.
Best wishes with your taxes this year!